Flexible Organization - UFAM

[Pages:622]Flexible Organization

Macroeconomics, sixth edition is organized around two central parts: A core and a set of two major extensions. The text's flexible organization emphasizes an integrated view of macroeconomics, while enabling professors to focus on the theories, models, and applications that they deem central to their particular course.

The flowchart below quickly illustrates how the chapters are organized and fit within the book's overall structure. For a more detailed explanation of the Organization, and for an extensive list of Alternative Course Outlines, see pages xiii?xv in the preface.

INTRODUCTION

A Tour of the World Chapter 1 A Tour of the Book Chapter 2

THE CORE

The Short Run

The Goods Market Chapter 3 Financial Markets Chapter 4 Goods and Financial Markets: The IS-LM Model Chapter 5

The Medium Run

The Labor Market Chapter 6 Putting All Markets Together: The AS-AD Model Chapter 7 The Natural Rate of Unemployment and The Phillips Curve Chapter 8

The Crisis Chapter 9

The Long Run

The Facts of Growth Chapter 10 Saving, Capital Accumulation, and Output Chapter 11

Technological Progress and Growth Chapter 12 Technological Progress: The Short, the Medium, and the

Long Run Chapter 13

EXPECTATIONS

Expectations: The Basic Tools Chapter 14 Financial Markets and Expectations Chapter 15 Expectations, Consumption, and Investment Chapter 16

Expectations, Output, and Policy Chapter 17

EXTENSIONS

THE OPEN ECONOMY

Openness in Goods and Financial Markets Chapter 18 The Goods Market in an Open Economy Chapter 19 Output, the Interest Rate, and the Exchange Rate Chapter 20

Exchange Rate Regimes Chapter 21

BACK TO POLICY

Should Policy Makers Be Restrained? Chapter 22 Fiscal Policy: A Summing Up Chapter 23

Monetary Policy: A Summing Up Chapter 24

EPILOGUE

The Story of Macroeconomics Chapter 25

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Sixth Edition

MACROECONOMICS

Olivier Blanchard

International Monetary Fund Massachusetts Institute of Technology

David R. Johnson

Wilfrid Laurier University

Boston Columbus Indianapolis New York San Francisco Upper Saddle River Amsterdam Cape Town Dubai London Madrid Milan Munich Paris Montr?al Toronto

Delhi Mexico City S?o Paulo Sydney Hong Kong Seoul Singapore Taipei Tokyo

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10 9 8 7 6 5 4 3 2 1

ISBN-13: 978-0-13-306163-5 ISBN-10: 0-13-306163-9

To Noelle and Susan

About the Authors

Olivier Blanchard is the Robert M. Solow Professor of Economics at the Massachusetts Institute of Technology. He did his undergraduate work in France and received a Ph.D. in economics from MIT in 1977. He taught at Harvard from 1977 to 1982 and has taught at MIT since 1983. He has frequently received the award for best teacher in the department of economics. He is currently on leave from MIT and serves as the Chief Economist at the International Monetary Fund.

He has done research on many macroeconomic issues, including the effects of fiscal policy, the role of expectations, price rigidities, speculative bubbles, unemployment in Western Europe, transition in Eastern Europe, the role of labor market institutions, and the various aspects of the current crisis. He has done work for many governments and many international organizations, including the World Bank, the IMF, the OECD, the EU Commission, and the EBRD. He has published over 150 articles and edited or written over 20 books, including Lectures on Macroeconomics with Stanley Fischer.

He is a research associate of the National Bureau of Economic Research, a fellow of the Econometric Society, a member of the American Academy of Arts and Sciences, and a past Vice President of the American Economic Association.

He currently lives in Washington, D.C. with his wife, Noelle. He has three daughters: Marie, Serena, and Giulia.

David Johnson is Professor of Economics at Wilfrid Laurier University and Education Policy Scholar at the C. D. Howe Institute.

Professor Johnson's areas of specialty are macroeconomics, international finance, and, more recently, the economics of education. His published work in macroeconomics includes studies of Canada's international debt, the influence of American interest rates on Canadian interest rates, and the determination of the exchange rate between Canada and the United States. His 2005 book Signposts of Success, a comprehensive analysis of elementary school test scores in Ontario, was selected as a finalist in 2006 for both the Donner Prize and the Purvis Prize. He has also written extensively on inflation targets as part of monetary policy in Canada and around the world. His primary teaching area is macroeconomics. He is coauthor with Olivier Blanchard of Macroeconomics (fourth Canadian edition).

Professor Johnson received his undergraduate degree from the University of Toronto, his Master's degree from the University of Western Ontario, and his Ph.D. in 1983 from Harvard University, where Olivier Blanchard served as one of his supervisors. He has worked at the Bank of Canada and visited at the National Bureau of Economic Research, Cambridge University, and most recently at the University of California, Santa Barbara as Canada-U.S. Fulbright Scholar and Visiting Chair.

Professor Johnson lives in Waterloo, Ontario, with his wife Susan, who is also an economics professor. They have shared the raising of two children, Sarah and Daniel. When not studying or teaching economics, David plays Oldtimers' Hockey and enjoys cross-country skiing in the winter and sculling in the summer. For a complete change of pace, Professor Johnson has been heavily involved in the Logos program, an after-school program for children and youth at First Mennonite Church in Kitchener, Ontario.

iv

Brief Contents

THE CORE

Introduction 1

Chapter 1 Chapter 2

A Tour of the World 3 A Tour of the Book 19

The Short Run 41

Chapter 3 Chapter 4 Chapter 5

The Goods Market 43 Financial Markets 63 Goods and Financial Markets: The IS?LM Model 85

The Medium Run 109

Chapter 6 Chapter 7

Chapter 8

Chapter 9

The Labor Market 111 Putting All Markets Together: The AS?AD Model 133 The Phillips Curve, the Natural Rate of Unemployment, and Inflation 161 The Crisis 183

The Long Run 205

Chapter 10 Chapter 11

Chapter 12

Chapter 13

The Facts of Growth 207

Saving, Capital Accumulation, and Output 225

Technological Progress and Growth 249

Technological Progress: The Short, the Medium, and the Long Run 267

EXTENSIONS

Expectations 289

Chapter 14 Chapter 15

Chapter 16

Chapter 17

Expectations: The Basic Tools 291 Financial Markets and Expectations 313 Expectations, Consumption, and Investment 337 Expectations, Output, and Policy 357

The Open Economy 377

Chapter 18 Chapter 19 Chapter 20 Chapter 21

Openness in Goods and Financial Markets 379 The Goods Market in an Open Economy 399 Output, the Interest Rate, and the Exchange Rate 423 Exchange Rate Regimes 445

Back to Policy 471

Chapter 22

Chapter 23 Chapter 24 Chapter 25

Should Policymakers Be Restrained? 473 Fiscal Policy: A Summing Up 493 Monetary Policy: A Summing Up 517 Epilogue: The Story of Macroeconomics 539

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